As extensively reported by The Greek Herald in our 6-part series in December 2019, the civil and legal altercations of the AHEPA NSW Inc. Greek association have carried on for decades. AHEPA, which stands for Australasian Hellenic Educational Progressive Association, was founded as a non-profit organisation that aims to foster the Greek diaspora abroad, by promoting a better understanding of Hellenism through people, language, culture and education.
Disagreements between member groups regarding the structure of the organisation exploded in 2015, resulting in three major court cases before the Supreme Court of NSW and an additional case this year before the NSW Court of Appeal. Throughout these escalated tensions within AHEPA NSW Inc., a group of long-standing members decided to break off and create their own “new AHEPA”, also known as the “National Council” or “NSW AHEPA Australia LTD”.
Here is a timeline of the court cases:
- 2016: Court Case 1 – Victory: NSW Fair Trading, Louisa Mellas and Maria Alexandrou (defendants)
- Total AHEPA NSW INC had to pay from this case: roughly $326,000 (indemnity costs)
- 2018: Court Case 2 – Victory: NSW AHEPA Australia LTD (the “new AHEPA”) (plaintiffs)
- AHEPA NSW INC had to pay indemnity costs again
- 2019: Court Case 3 – Victory: AHEPA NSW Inc (defendants)
- “new AHEPA” to pay
- 2020: NSW Court of Appeal (against result of Court Case 3) – Victory: NSW AHEPA Australia LTD (the “new AHEPA”)
The result of these cases has left AHEPA NSW Inc. with a hefty costs order to pay that covers their own legal fees as well as the fees of the victorious party.
On Wednesday 16 December 2020, AHEPA NSW Inc’s voluntary administrators, Cor Cordis, hosted a meeting for creditors. The purpose of the meeting was for creditors of AHEPA NSW Inc to decide the Association’s future through a vote on the following:
- Whether the Association should enter into a deed of company arrangement (DOCA)
- Whether the administration should end, or
- Whether the Association should be wound up and a liquidator appointed.
In the supplementary report to creditors, AHEPA NSW Inc’s administrators recommended creditors vote for option 1: for the association to enter into a deed of company arrangement (DOCA). This option included the following:
- A return to creditors of 100 cents in the dollar.
- The sale of Headquarters and Rockdale Leased Premises to Rock Princes (Sydney) Pty Ltd (RPS).
- A deposit totalling $1.93million be made on signing of the DOCA and the balance of funds due on settlement 28 days after exchange.
- ROCKDALE Headquarters – 394-396 Princess Highway Rockdale- will be leased from RPS to the Association rent free in the first year (a saving of at least $100,000) and a reduced rate following in years two and three ($100,000 plus outgoing each year), and
- For the Deed Administrators to pay a dividend as soon as possible after the DOCA is signed.
The administrators noted, “we had hoped that the DOCA process may provide a means by which the underlying disputes between factions within the membership might be resolved. Despite all parties’ genuine attempts to find a way of achieving that, ultimately that has not been possible.”
The sale of AHEPA HQ:
The divide between certain members of AHEPA NSW Inc. and its Committee of Management was made very clear during the creditors meeting, in regard to one particular point: the sale of AHEPA HQ in Rockdale.
The sale of AHEPA HQ has always been a major point of contention for members, many of whom were against the Committee of Management’s pursual to develop a Hellenic Cultural Centre in Bexley, which is currently owned by Bayside Council. The Greek Herald notes that the proposed Bexley development site will be leased for 20 years with an option to renew for another 20 years. The development will be funded with the proceeds of the sale of the Rockdale Headquarters.
A number of creditors took issue with AHEPA NSW Inc’s administrator’s recommendation to sell the Rockdale property to a related party (Rock Princes P/L) in an off-market transaction rather than a public auction. This tension escalated after creditors learnt there had been an external offer for $4.6 million, which is $200,000 above the valuation price of the property that Rock Princes would purchase for. The DOCA recommended by the administrators outlines that the Rockdale property will be sold to Rock Princes at valuation price. It should be noted that this valuation price was determined by a private valuation obtained by Rock Princess PL which administrators would not disclose due to “its commercial sensitivity,” despite it needing to be voted upon and requested by creditors during the online meeting numerous times.
Additionally, one of the creditors representatives who were against the DOCA supporting the sale of Rockdale HQ requested that the meeting be postponed in order to properly allow for the consideration of the higher offer at $4.6 million however, the administrators maintained that their recommendation to support the DOCA of the sale of Rockdale remained as was and that the vote could not be postponed given it was being held on the 45th day and is required to be voted upon. The same creditor asked that the meeting at least be pushed to the afternoon of the same day as the additional 200k would benefit AHEPA INC, however once again, administrators declined.
“A group of related parties are proposing to purchase this property at a price lower than what has been offered by another party. It would be most appropriate to have this property sold at an auction,” argued one creditor in the online meeting.
The Directors of Rock Princes are Mr Theophilus Premetis and Mr Bill Giakoumis.
Rock Princes’ DOCA proposal outlined that the sale of the Headquarters at Rockdale will fund the ‘Bexley Project’, which has been argued by the Committee of Management as the key to “progress ahead, bring the youth in and give them the lead to lift it up”. Meanwhile, the members who disagree with the sale of AHEPA HQ have stated they are “fighting for the memory of those gone”.
Certain creditors were unhinged by the inclusion of the Bexley Project in the DOCA due to the risk that the proposed Bexley development could not receive approval from council, or not go ahead for any reason, meaning the Committee of Management would be left to manage the funds from the sale of Rockdale. At this stage Bayside council has not offered any guarantees that this development would go ahead.
The complexity and hostility of the AHEPA NSW Inc. situation has cost the association millions, which was experienced by the administrators whose fee estimates jumped from an original estimate of $75,000 – $100,000 to $514,986.50. When asked during the online meeting why there was such a discrepancy in estimated to actual fees it was said that it was due to the “complexity and legal issues” apparent in the organisation.
It has been argued by parties opposing the sale of Rockdale HQ that AHEPA INC need not have gone into administration at all since its debts without administrators fees was $1,712,563 and its yearly rental income of its properties collectively stood at $550,000. Over some years the debts could have been repaid whilst holding onto the properties it owns.
The majority vote won for the DOCA to sell the Rockdale HQ to Rock Princes.
What happens when a court orders a “costs order”?
At the conclusion of proceedings, generally the Court will make a costs order setting out which party must pay the legal costs associated with the proceedings. Usually, the unsuccessful party will be ordered to pay the legal costs and expenses of the successful party. Even if such an order is made, it can take some time for the costs order to become enforceable. This is because other than in certain circumstances where the Court may fix the quantum of costs payable, in most cases the Court will make an order for costs to be paid, as agreed between the parties, or, as assessed after an independent review.
Once an order is made, the parties will negotiate to agree on an amount of costs payable. If they are unable to reach an agreement, the matter will need to be referred to the assessment process which involves an independent review of costs by a costs assessor. Once that review process is complete, a determination is issued concerning the amount of costs payable which can be registered as a judgement. Once a determination is made, there are review and appeal procedures available, if required.
As this can be a lengthy process, in many cases it can be many, many months before a quantifiable amount of costs is payable, and the costs order ultimately enforceable.